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Thanks to Shrouding, Costs Are Not Always What They Seem

A while back, a friend of ours took his son to a professional basketball game. He walked up to an arena window and purchased two tickets for $40 apiece. But his credit card was NOT charged $80. The clerk assessed an additional $3 "service charge," which prompted our friend to ask a logical question:

"I came and got the tickets. So what 'service' is the team providing? Doesn't the ticket cost cover the 'service' of printing it and giving me a seat?"

The answer is no, it doesn't. And guess what? The add-on charge would have applied, even if he had paid cash.

This practice of piling on mysterious extra charges is mushrooming. Another friend bought 3 baseball tickets. They were cheap compared to basketball -- just $15 apiece. But listen to the add-ons: A $4 "convenience fee," whatever that is, on each ticket. A $3.50 "processing charge" on the total order. And another $1.75 because our friend bought and printed his tickets online. That's almost $18 extra -- a 40% markup!!

Heaping on charges is called "shrouding." You shroud, or conceal, the real costs of goods and services until it comes time to pay the bill. As the New York Times recently reported, shrouding is common at places like restaurants, where sparkling water poured at your table can significantly boost your bill; and rental-car counters and auto dealers, where there's a litany of extras and warranties and insurance fees that show up only in fine print.

So if you're thinking of attending a U.S. sporting event, bring money! -- not just for tickets, hot dogs, and drinks, but also for all manner of "convenience charges" that are especially "convenient" to the team's bank account.